World Economy: Asian markets deeply in the red

World EconomyAsian markets deeply in the red

Veröffentlicht am 18.09.2008 | Lesedauer: 3 Minuten

Quelle: AP/Lai Seng Sin

Asian stocks tumbled Thursday, tracking declines on Wall Street as investors feared more companies could succumb to the global financial crisis that forced the U.S. to bail out troubled insurer American International Group Inc.

Hong Kong’s Hang Seng Index led the region’s losses, tanking 1,272.86 points, or 7.22 percent, to 16,364.33 – its lowest level in over two years.

In Japan, the Nikkei 225 stock index was down 445.67 points, or 3.79 percent, at 11,304.12. Australia’s S&P/ASX200 index fell more than 3.5 percent, South Korea’s Kospi lost 3.6 percent and Shanghai’s index fell 5.8 percent.

The losses tracked U.S. markets, where the Dow Jones industrial average fell about 450 points, or 4.06 percent, to 10,609.66.

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Investors were unsettled by the Federal Reserve’s $85 billion loan to AIG, the huge U.S. insurer that lost billions in the risky business of insuring against bond defaults. It was the latest financial giant to fall in a historic financial crisis on Wall Street that’s already claimed investment banks Lehman Brothers and Merrill Lynch.

"It’s a complete collapse of confidence,“ said Francis Lun, general manager of Fulbright Securities Ltd in Hong Kong. "The financial crisis in the U.S. is hitting everyone, everyone is running for cover. If the largest insurance company can fail, than no one is safe.“

As equities markets staggered, investors fled to gold, seen as a safe haven in times of trouble. Gold for December delivery rose as much as $90.40, or 11.6 percent, to $870.90 an ounce in after-hours trading on the New York Mercantile Exchange after jumping $70 to settle at $850.50 in the regular session.

Global stock markets roared on Friday after news of a possible U.S. government plan to rescue banks from mortgage debt raised a sense of hope amid the world’s worst financial crisis in decades. European exchanges responded with their own ferocity to the possible plan, surging as battered bank stocks rebounding along with them. The news of a likely U.S. lifeline, along with new changes to short-sel

President Bush summoned Barack Obama, John McCain and legislative leaders to an extraordinary White House summit, warning Americans and Congress on Wednesday that failing to act on a $700 billion financial industry bailout could lead to "a long and painful recession."

An accord among lawmakers on details of an urgent multibillion-dollar plan to avoid an economic disaster seemed to stall after a historic White House meeting of President Bush, the two men fighting to replace him and other congressional leaders ended with conflicts in plain view.

News of a possible U.S. government plan to rescue bank from mortgage debt sent Asian stock markets soaring on Friday after a rough week of plummeting stocks and brought hope of a letup in the world's worst financial crisis in decades. Hong Kong’s Hang Seng Index jumped 7 percent at the open and Japan’s Nikkei 225 average was up 3.8 percent at 11,920.86.

The Bush administration asked Congress for the power to buy $700 billion in toxic assets clogging the U.S. financial system and threatening the economy as negotiations began on the largest bailout since the Great Depression.

President George W. Bush said Wednesday that lawmakers risk a cascade of wiped-out retirement savings, rising home foreclosures, lost jobs and closed businesses if they fail to act on a massive financial rescue plan. "Our entire economy is in danger," he said.